Price falls set to increase across UK’s biggest cities – Hometrack

The annual rate of house price growth in London has reached a seven-year low and could be in negative territory by the middle of this year, research claims.

The February Hometrack UK Cities House Price Index shows two fifths of the capital’s postcodes registering year-on-year price falls.

The housing data firm said London registered annual price growth of 1% in February, down from 4.3% a year ago, but at this rate it could be negative by the middle of 2018.

The London boroughs with the greatest decline were the City of London, where prices were down 7.9%, and Camden and Southwark, where values dropped 1.9% and 1.8% respectively.

In contrast, regional cities such as Edinburgh, Liverpool and Manchester are registering house price growth in excess of 7% per annum. The Scottish capital is up by the most at 8% annually to £227,300.

Meanwhile, average prices fell in Cambridge and Aberdeen during February. Average values were down 1.5% annually in Cambridge to £429,200 and Aberdeen saw prices drop 7.7% to £160,600.

Overall UK house price inflation based on the UK’s largest cities was 5.2% at £251,200, up from 4% in February 2017.

Richard Donnell, insight director at Hometrack, said: “The weakness in London’s housing market has been building since 2015 on the back of numerous tax changes aimed at overseas and UK investors and growing affordability pressures facing home owners.

“Sales volumes are first to be hit when demand weakens and housing turnover across London is down 17% since 2014. Sales prices are next to follow, but with few forced sellers the level of price falls remains low.

“We expect the balance of markets registering price falls to increase over 2018 as prices continue to adjust to what buyers are prepared to pay. Average London house prices are up 86% on 2009 levels so there is a sizeable equity buffer to absorb any price falls.

“Away from southern England, house price growth remains robust in regional cities where prices have registered lower overall growth since 2009 and affordability levels are in line with their long-run average.”

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